Jan. 10 (Bloomberg) -- Mumbai airport, the gateway to
India’s financial capital, will open a new international
terminal in its first major upgrade in three decades as the
nation aims to ease infrastructure constraints that hurt growth.

Designed by Skidmore, Owings & Merrill LLP, the architects
of Dubai’s Burj Khalifa and Chicago’s Willis Tower, the terminal
will boost the airport’s passenger handling capacity by about a
third to 40 million a year. Prime Minister Manmohan Singh
inaugurated the facility today.

New airport facilities in Mumbai, New Delhi and in a dozen
other cities are part of the government efforts to convince
voters that Singh has delivered on improving infrastructure
before elections due by May. Polls indicate the main opposition
party would top Singh’s ruling coalition. Congested ports, roads
and other transport bottlenecks have contributed to India’s
economic growth slowing to a decade low.

“Mumbai has appalling infrastructure,” said Kapil Kaul,
chief executive officer of CAPA Centre for Aviation’s India
unit. “I hope the new terminal inspires the political class to
fast track all the key projects.”

GVK Power & Infrastructure Ltd. and its partners took over
running the Mumbai airport in 2006 as part of government plans
to modernize India’s transportation networks. The company had to
demolish about 100 buildings including a police station for the
construction of the new terminal that cost about 55 billion
rupees ($885 million).

Shares of GVK rose 2.5 percent in Mumbai to close at 10.20
rupees, the highest level since March 19. The benchmark S&P BSE
Sensex gained 0.2 percent.

‘Jaya He’

The terminal, a 4-level structure spread over 439,203
square meters, will have 208 check-in counters, 60 departure
immigration counters and more than 21,000 square meters of
shopping area. A 3.2 kilometer (1.9 mile)-long wall, named ’Jaya
He’ or ’victory to thee,’ spans three floors and is decorated
with a montage of traditional Indian doors, sculptures and other
artwork.

“After a supercharged Sunday tour of Mumbai’s T2, I say,
confidently, that in comparison every other airport in the world
seems banal and bland,” Anand Mahindra, chairman of India’s
biggest sport-utility vehicle maker Mahindra & Mahindra Ltd.
wrote on Twitter. “For Mumbaikars, long tortured by a hellish
airport, the enormous immigration and baggage spaces are like
manna from heaven.”

A three-kilometer elevated road will connect the facility
with one of Mumbai’s two main highways. Domestic operations will
also be integrated with the terminal next year, said G.V. Sanjay
Reddy, Vice Chairman of GVK Power.

Challenges Remain

Some challenges for the airport still remain. Almost a
sixth of Mumbai airport’s 802 hectares (1,982 acres) of land is
occupied by slums, hindering expansion of runways. The airport
is working on plan to relocate squatters from 65,000 shanties as
part of an upgrade that started in 2006, the operator said in a
2012 report.

Even after the third and final phase of work to develop the
airport is completed in 2020, the facility will struggle to
handle more flights as it has only an intersecting runway and
one taxiway, according to a report by the nation’s airport
tariff regulator.

India’s local airline passengers may reach 107.2 million by
2016, making it the world’s fourth-largest domestic market, the
International Air Transport Association predicts, as entry of
budget carriers such as IndiGo prompt more people to fly. The
nation’s operators may need 1,450 new planes in the next 20
years, according to Boeing Co.

Bangalore, Hyderabad

Airports in other Indian cities have also been upgraded. In
2010, New Delhi opened its new terminal -- built in 37 months --
that helped more than double the airfield capacity to 60 million
passengers a year. In comparison, Singapore’s Changi airport can
handle 70 million passengers. Bangalore and Hyderabad in south
India opened new airports in 2008.

The number of airline travelers passing through Mumbai may
increase to 119 million by 2031, according to the City and
Industrial Development Corp. of Maharashtra, the state-owned
agency that’s overseeing work on a second airport for the city.
The project, proposed in 1997, has made little progress amid
land-acquisition delays.

On Jan 8, hundreds of workers were washing the granite
floor, glass walls and white pillars at the new Mumbai terminal.
Audio systems and baggage carousels were being tested.

“I’ve seen the pictures of the new terminal, and I’m very
excited about my next flight,” said Samik Basu, a businessman
in Mumbai who travels abroad about once a month. “Hopefully,
the long queues at immigration, check-in and customs will now be
history.”